Smooth flight or turbulence ahead for India's airlines?

Contact-intensive services were among the hardest hit by the pandemic, with airlines being no exception. But now, with the infection ebbing and the threat of a third wave diminishing, the aviation sector is seeing green shoots of recovery

IndiGo CEO Ronojoy Dutta recently told a financial daily that the situation was improving rapidly and faster than the sector had expected. Dutta said that while IndiGo’s performance in the last quarter was strong, the current quarter was also shaping up very well. He underlined that most importantly, revenue and traffic were coming back. Also, in a recent interview with Business Standard, Dutta’s response to why IndiGo was holding back its qualified institutional placement decision also highlighted how the airline is faring.  

Things are not looking up for IndiGo alone. The entire sector is seeing buoyancy. According to a recent report, November has brought good news for the aviation sector, with daily domestic air traffic reaching close to pre-Covid levels. On 14th November, 385,661 passengers were recorded at departures. This was the highest-ever daily traffic seen in India since air travel resumed in May last year following a two-month shutdown. This amounted to 96.4 per cent of pre-Covid air traffic level, as, on an average, around 400,000 domestic passengers were recorded on a daily basis in 2019.  

Fresh blood is also being infused into the sector. Akasa Air, the budget airline backed by Rakesh Jhunjhunwala, recently placed an order for 72 Boeing aircraft. Valued at nine billion dollars at list price, the order was signed at the Dubai Air Show.

Also, let us not forget the most momentous development for the sector, the privatisation of Air India. It is returning to the Tatas after 68 years. If taken together, the Tata group, which also operates Vistara and AirAsia India, will have around 25 per cent share of the domestic airline market. That’s apart from the fact that it now has the largest Indian airline on international routes.

A revitalised Air India, no doubt, will have a major impact on the sector. In another interview with a national daily, IndiGo CEO Ronojoy Dutta said he believed the disinvestment of Air India was good for the country, the aviation industry and also IndiGo.  

However, even as the effects of the pandemic recede, high fuel prices are likely to play spoilsport for airlines.

Things are looking up for the Indian aviation sector. And hopefully, it will not run into any turbulence in the near future, especially triggered by fuel prices or a resurgence in Covid-19 cases.